Member Info for UpDownFlat

I think the US government (and most governments) are spending double what they did 12 months ago. What that means is any new stimulus has to be incremental to this new normal level of spend. This debt will have to be monetised as it cannot be repaid. The annual US budget deficit($3T) was 15% of GDP($20T) last year. I think a "mostly" incremental $3T stimulus takes that to 25% of GDP this year. A budget deficit a around $5T pa spending in excess of their $3T pa. govermental income. Once you approach 50% of annual GDP the mathematics’ become impossible.

after a few glasses of wine last night, I squited my eyes and I could clearly see a hedgehog pattern in the gold charts. This is a massive sell signal.

yes petra!!!!!

What ? you think that either:
Interest rates are going up in the next 12 months
or Inflation expectations are going down in the next 12 months
or the dollar is going higher in the next 12 months

Ok so we have had the coronavirus cure rally and the 10 Yr rally to 1% (which they have said they won’t allow to rise until 2023) and gold is going up again. Let’s hope there isn’t anything else in the way.

Rbrand, this was starting to happen prior to the vacine news. The 10 year is one of the drivers of gold price. The banks will need to step in to contain these rates. They will need to remain low for many year. The number of people in employment in the UK is 2.5m less then 1 year ago, according to latest ONS, this is a trend that is likely to continue due to process automation. The government will probably have to do perminate furlow at some point. That will continue to cost.

As I understand things, Gold is struggling to rise because real interest rates (2/10/30 year) in the US are rising driven by markets. At some point the central banks will need to step in and reduce these as mortages and credit are linked to these.

This board is working again

On another subject I think the share price will start to move up now because, valuation models will need to be updated for 2021, with POGs volume and the price of gold.
Remember back to the behaviour of the shares in January 2020.

......In my opinion I think this is a dubious provision on the basis that it is not likely to happen and they have already authorised the shares. Either they didn’t push back at the auditors or the auditors didn’t push back at POG.

If the calculation was for 100% of convertibles then it would imply that this will not be a future drag on profits as POG has already built up a excess provision. Lets hope so.

Imagen if these convertibles had not converted. What would the results be ?

POG shareholders really need to thank Stukarov/others for converting, because if conversion had not taken place that technical FV adjustment would have been -$406m. We now really need the last 30% to convert.

Each $100 increase in the price of Gold is roughly equal to a $40m increase in cashflow per year at own production volume of 465,000. With Gold at $1900, POG should generate enough over the next 24 months to pay for TEMI in cash, pay back the $500m bonds due at the end of 2022 in cash, pay any residual balance of the prepay debt and pay a smallish dividend twice a year. After that I assume it all becomes dividend.

Nicely presented kenj. My point to L3 was that you cannot determine Q3 cash generation without more information. We don't really know what's happened with working capital and other items.

Actually maybe this is a provision for the unconverted element at an average price of 34p per share.

RB,
if this is a notional "what-if they settle in cash charge , in the future" then it needs to come back to the P&L as a positive at the year end because they didn’t settle in cash. I find it odd that they would take such a hit, because in fact they already know the future. They didnt buy these shares back at a market rate they issued them.

Kenj,

I agree with you, this accounting entry is incorrect. The final position is that the company needs to eliminate 125m of debt and create 125m of share capital(assuming full conversion).
They already have a 125m liability for the debt.
Therefore it is a simple dr 125m - debt and cr 125m - share capital (assuming full conversion). No p&l is involved. Having had a little time to think about it, it doesn't make sense. I now believe this is incorrect.

Well said RB,
‘Wodderwick Lyne’ would have wrambled on about a how wonderful they were and how they needed to reward “All” stakeholders. By this he would have meant, bonuses for the board and employees, options and increases for the management and a few side deals for the friends.

JC (James Cameron not the “JC”) cut all the BS and described the companies issues and the people causing those issues and clarified exactly where the shareholders have been in the pecking order for the last eight years.

L3 USD 538 does not include the prepaid gold debt. I think this must reflect bonds less cash.

So the probably applied cash to either : paying back prepaid debt or making interest payment on the convertible or one of several other answers. You can't tell unless you know the other values in the balance sheet.